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April 20, 2015
CFPB: Military allotment processor to pay $3.1 million
CFPB announced Monday that Fort Knox National Company and its subsidiary, Military Assistance Company, will pay a $3.1 million penalty as a result of its charging millions of dollars in hidden fees to servicemembers.
Kentucky-based Fort Knox National Company, through Military Assistance Company, charged recurring, undisclosed fees to servicemembers who allowed the company to make monthly payments to a creditor out of their account. Servicemembers would pay Military Assistance Company between $3 and $5 for this service. CFPB noted that excess funds often accumulated in the payment account without servicemembers' knowledge.
This allotment system was created to help servicemembers send money home to their families and pay their creditors before bank payments and electronic transfers were common banking services.
CFPB said from 2010 to 2014, the company charged these hidden fees and servicemembers had their money slowly drained from their accounts. CFPB alleged that the company failed to clearly disclose key information about costs and failed to notify servicemembers that it had charged fees.
Servicemembers who were harmed by Fort Knox National Company's actions will be contacted by CFPB.
Kentucky-based Fort Knox National Company, through Military Assistance Company, charged recurring, undisclosed fees to servicemembers who allowed the company to make monthly payments to a creditor out of their account. Servicemembers would pay Military Assistance Company between $3 and $5 for this service. CFPB noted that excess funds often accumulated in the payment account without servicemembers' knowledge.
This allotment system was created to help servicemembers send money home to their families and pay their creditors before bank payments and electronic transfers were common banking services.
CFPB said from 2010 to 2014, the company charged these hidden fees and servicemembers had their money slowly drained from their accounts. CFPB alleged that the company failed to clearly disclose key information about costs and failed to notify servicemembers that it had charged fees.
Servicemembers who were harmed by Fort Knox National Company's actions will be contacted by CFPB.
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